Planes, Trains, and Automobiles (Trucks)

Survey Reveals Domestic Transportation Capacity Trends

By Bruce Tompkins
Executive Director, Supply Chain Consortium

Shipping goods across the U.S. has always had, and will continue to have, shippers scratching their heads over which mode of transportation is the most efficient and cost effective. As transportation services change, more options become available, and costs fluctuate, the trends for usage also change. The Supply Chain Consortium's recent Domestic Transportation Capacity Hot Topic Survey Report outlines some of the practices and trends in rail and truck capacity.

Transportation Mode Trends

Over the next three years, the Consortium's survey participants expect significant shifts in transportation modes, as shown in Figure 1. Starting with intermodal rail and boxcar rail, many companies anticipate major increases in these areas. Very few expect to see a decrease in rail usage.

Parcel shippers should also notice more business coming their way, and companies will begin to increase their use of inbound consolidation as a means of reducing the cost of transportation. On the other hand, the survey reveals that air freight will trend downward, and truck transportation is expected to stabilize, with little movement either way.

Figure 1. Expected Mode Change Trends Over the Next Three Years

 

Rail Corridors

Some improvements have been made, but rail capacity constraints still exist (particularly in the Midwest). To combat rail capacity limitations, investments have been made in locomotives and intermodal rolling stock, and select rail corridors have received physical improvements. Furthermore, the Midwest is not only known for its capacity constraints -- survey respondents also view it as the area of the U.S. with the greatest price increases (Figure 2).

Figure 2. Rail Corridors with Most Constraints and Greatest Price Increases

 

Truck Capacity

Many regions in the U.S are also struggling with truck capacity constraints. Truck rates are escalating, independent of fuel pricing, and the market is becoming more aggressive with respect to truck capacity. A majority of survey respondents are making some level of changes in truck usage, either from LTL to TL, and some report that they are converting to rail. As shown in Figure 3, truck usage is restricted by several factors. The main variables impacting truck capacity are:

• Limitations for certain destinations and the backhaul and empties returns opportunities
• Driver availability in some regions
• Equipment availability

Figure 3. Variables Impacting Truck Capacity

 

Domestic Transportation Capacity Outlook

Domestic transportation capacity issues are not expected to end any time soon. As the need for transportation across the nation increases, so do the problems and limitations with transportation modes. In the future, the cost and availability of fuel will be important factors in determining where capacity constraints will occur as well as which modes will be most economical.

Evaluation of transportation capacity constraints will continue to be dynamic and ongoing and differ from region to region over time as the variables affecting capacity fluctuate. Additionally, with limited people resources and capital spending, it will be increasingly difficult to optimize supply networks to avoid capacity issues.

It is clear that transportation capacity issues will always be a big factor. But if you know the trends and potential constraints, you can be prepared to develop the right strategies and select the best practices for your shipments.

 

About the Supply Chain Consortium
The Supply Chain Consortium is the premier source for supply chain benchmarking and best practices knowledge. With 180 participating retail, manufacturing and wholesale/distribution companies, the Consortium sponsors a comprehensive repository of 17,000-plus benchmarks complemented by search capabilities, online analysis tools, topic forums and peer networking for supply chain executives and practitioners. The Consortium is led by the needs of its membership and an Advisory Board that includes executives from Campbell Soup Company, Hallmark Cards, Hewlett Packard, Ingram Micro, Kraft Foods, MillerCoors, The Coca-Cola Company, Target, and True Value Hardware. To learn more about how your company can become a member of the Supply Chain Consortium, contact John Foley, 919-855-5461 or visit www.supplychainconsortium.com.

This article is available for reprint with attribution. If you would like more information or an interview, please contact Keri McManus, (919) 855-5516.

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